In the dying days of the Thatcher government illegal raves attracted thousands of drug-fuelled revellers to tranquil rural areas, where they danced the night away to brain-numbing dance music.

Now a new generation of Tory ministers have been warned that their new proposals designed to help the Big Society will unwittingly inspire a renaissance in the all-night, open-air parties.

Councils have warned that plans to lift regulations on live entertainments will leave local residents powerless to silence raves and other music events, leading to a “noise nuisance free-for-all”.

A London local authority has even warned the reforms will make it harder to silence the Notting Hill carnival.

Under current rules anyone holding an event judged to be a live entertainment is obliged to apply and even pay hundreds of pounds for a license from their local authority.

But John Penrose, the tourism minister, has described these rules as “pointless bureaucracy”, as the rules are even applied to school plays, folk duos and even Punch and Judy shows.

Ministers are consulting on plans to free any event with an attendance of less than 5,000 people from needing a license. They hope this will make it easier for local communities to hold fetes and street parties.

The government even hopes to relax the rules by April next year, in time for the Queen’s Diamond Jubilee and the London Olympics.

But local authorities have written to the Department of Culture, Media and Sport warning that the change will lead to a “noise nuisance free-for-all”.

“In its intention to cut red tape and box-ticking for village fetes, school concerts and amateur plays, this will inadvertently be giving carte blanche for noisy parties, concerts and all night raves attended by thousands.”

Raves – also known as “acid house parties” – attracted crowds of up to 25,000 during the late 1980s and early 1990s. Venues ranged from open fields, to country clubs and empty warehouses.

As well as loud repetitive, electronic “techno”, “trance” and “drum and bass” music, these events would be characterised by laser light shows and smoke machines.

Many of the parties were staged around close to the M25 in the home counties where they caused considerable anger and loss of sleep.

Alan Tolley, senior licensing officer at Sandwell Council, near Birmingham, said: “These changes are a sledge-hammer to crack a nut.

“The government says local authorities and residents have other powers to stop noisy events, but those can take weeks or even months to take effect.”

Nick Padget-Brown, deputy leader of Kensington and Chelsea’s council, said that although his borough was unlikely to be plagued by raves, he was concerned that it would make it harder to silence parties held around the Notting Hill Carnival.

“This is a deregulation too far,” said Padget-Brown. “It would gives councils very little power to stop noisy music performances.We already receive 10,000 complaints about disruptive noise each year.

“We will get a huge amount more if these changes are allowed to go through.”

Although councils raise some money from live entertainment licenses, they stress such revenue is small and not the motive for their opposition to lighter regulation.

A spokesman for the Department for Culture, Media and Sport said: “These are proposals that we are consulting on – we genuinely want to know what local authorities and other people think of these ideas. We will read their submissions to this consultation with interest.”